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Business & Marketing
Break-Even Calculator — Units & Revenue to Cover Costs
The number of sales a small business needs before the first dollar of profit
The break-even point is the single most important number a small-business owner can know: it tells you how many units you have to sell, and how much revenue that brings in, just to cover all of your costs. Below break-even you're losing money on the venture; above it, every additional sale starts adding to profit. Whether you run a coffee cart, a print-on-demand T-shirt shop, an Etsy candle store, or a SaaS side project, the break-even calculation turns a vague gut feeling — "am I making money yet?" — into a hard, defensible figure you can plan around.
The method rests on three inputs. Fixed costs are the expenses you pay no matter how much you sell: rent, software subscriptions, insurance, equipment leases, a salaried employee. Price per unit is what a customer pays you for one item. Variable cost per unit is what each individual sale costs you to fulfill — materials, packaging, payment-processing fees, shipping, the wholesale cost of goods.
The engine of the formula is the contribution margin — the slice of each sale left over after you pay that unit's own variable cost:
Contribution margin = price per unit − variable cost per unit.
That leftover is what "contributes" toward paying down your fixed costs. Once enough units have each chipped in their contribution margin to fully cover fixed costs, you've broken even:
Break-even units = fixed costs ÷ (price − variable cost).
Multiply those units by the price and you get the break-even revenue — the total sales dollars you need to ring up:
Break-even revenue = break-even units × price.
A quick worked example: suppose your fixed costs are $10,000, you sell each unit for $50, and each unit costs you $30 to make and deliver. Your contribution margin is $50 − $30 = $20. Divide fixed costs by that margin: $10,000 ÷ $20 = 500 units. At $50 each, that's $25,000 in revenue to break even. Sell the 501st unit and you finally pocket $20 of profit.
The one rule that trips people up: if your price is at or below your variable cost, the contribution margin is zero or negative and there is no break-even point — you lose money on every single sale and selling more only digs the hole deeper. This calculator flags that case for you. These figures are planning estimates, not financial advice — always sanity-check them against your real bookkeeping before betting the business on them.
📖 See also: Mortgage Points: Should You Buy Down Your Rate?
Calculator
Fill in the fields and click "Calculate" for instant results.
📰 Formula
• Contribution margin = price per unit − variable cost per unit • Break-even units = fixed costs ÷ contribution margin • Break-even revenue = break-even units × price per unit • Contribution margin ratio = contribution margin ÷ price • No break-even exists when price ≤ variable cost per unit
📰 Formula
• Contribution margin = price per unit − variable cost per unit • Break-even units = fixed costs ÷ contribution margin • Break-even revenue = break-even units × price per unit • Contribution margin ratio = contribution margin ÷ price • No break-even exists when price ≤ variable cost per unit
🧪 Worked examples
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Example 2
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Example 3
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Example 4
⚠️ Common mistakes
- Mixing fixed and variable costs — rent is fixed, but per-order shipping and materials are variable.
- Forgetting payment-processing fees (about 2.9% + 30¢ per sale) in the variable cost per unit.
- Setting a price at or below variable cost, which means there is no break-even point at all.
- Treating break-even as profit — it only covers costs; profit starts with the very next unit.
- Using monthly fixed costs with an annual sales target (or vice versa) without matching the periods.
💡 Tips
- Raising your price or trimming variable cost widens the contribution margin and lowers break-even faster than cutting fixed costs.
- Run break-even per month so it lines up with rent, payroll, and subscriptions you pay monthly.
- Add a small profit target to fixed costs (fixed + desired profit) ÷ margin to find the volume for a goal, not just break-even.
- Check the break-even units against demand you can realistically reach — a low number on paper still has to be sellable.
Embed this calculator on your site
Copy the code below and paste it into the HTML of your site or blog.
<iframe src="https://www.calcnimbus.com/embed/break-even-calculator" width="100%" height="500" frameborder="0" style="border:1px solid #eee;border-radius:12px"></iframe>
❓ Frequently asked questions
How do I calculate the break-even point?
Divide fixed costs by the contribution margin per unit (price minus variable cost). Example: $10,000 ÷ ($50 − $30) = $10,000 ÷ $20 = 500 units to break even.
What is contribution margin?
It's the money left from one sale after paying that unit's variable cost: price − variable cost per unit. At $50 price and $30 variable cost, the contribution margin is $20, and that $20 goes toward covering fixed costs.
How do I find break-even in revenue (dollars) instead of units?
Multiply break-even units by your price. 500 units at $50 each = $25,000. You can also divide fixed costs by the contribution margin ratio (margin ÷ price).
What costs count as fixed versus variable?
Fixed costs stay the same regardless of sales — rent, insurance, software, salaried staff. Variable costs rise with each unit — materials, packaging, shipping, and payment-processing fees.
What if my price is lower than my variable cost?
Then your contribution margin is negative and there is no break-even point: you lose money on every sale, so higher volume increases the loss. Raise the price or cut the variable cost first.
Do I include payment-processing fees in break-even?
Yes. Card processors typically charge around 2.9% plus 30¢ per transaction, which is a variable cost per unit. Add it to materials and shipping when you set the variable cost.
How do I find the units needed for a profit target, not just break-even?
Add your desired profit to fixed costs, then divide by the contribution margin: (fixed costs + target profit) ÷ margin. For $10,000 fixed plus $5,000 profit at a $20 margin, that's 750 units.
Is break-even monthly or for the whole year?
It depends on the period your fixed costs cover. If you enter monthly rent and subscriptions, the result is units per month. Keep the costs and the target on the same timeframe.
Does hitting break-even mean I'm profitable?
No. At break-even your total revenue exactly equals total costs, so profit is zero. Profit begins with the next unit sold, each adding its full contribution margin to your bottom line.